The CEO of the National Pensions Regulatory Authority (NPRA), John Kwaning Mbroh, has provided strong assurances about the future stability of the Social Security and National Insurance Trust (SSNIT).
This comes in response to a concerning valuation study by the International Labour Organisation (ILO) projecting a complete depletion of SSNIT’s reserves by 2036 if no corrective measures are implemented.
The ILO report forecasted that starting in 2029, SSNIT’s total income, including contributions, investment income, and other revenue streams, would fall short of covering its annual expenditures. This shortfall is predicted to deplete SSNIT’s reserves by 2036.
The report attributes this potential financial instability primarily to delayed payments by the government, which constitutes a significant portion of SSNIT’s total indebtedness. As of December 31, 2021, the government owed SSNIT GH¢6.9 billion, representing 73.7% of the total GH¢9.35 billion in arrears.
Mr. Mbroh emphasized the forward-looking nature of the ILO’s projections, which are designed to anticipate future scenarios and prompt preemptive actions to safeguard the scheme. “The report is forward-looking; ILO always projects potential outcomes to ensure we continue to improve the financial sustainability of the scheme over a long period,” he noted.
Strategic Interventions
The NPRA CEO detailed several measures already in place to bolster the scheme’s financial health. A central aspect of these measures includes a stringent review of SSNIT’s investment policies.
Mr. Mbroh highlighted the need to revise investment asset classes to ensure economic viability, thereby revitalizing the scheme. Additionally, administrative expenses are under rigorous scrutiny, with significant efforts already undertaken to rationalize expenditures.
Mr. Mbroh also stressed the importance of stepping up enforcement actions to ensure timely contributions from companies. He acknowledged recent government efforts, including a substantial injection of GH¢2.6 billion, aimed at addressing the arrears and enhancing the scheme’s liquidity. “We are stepping up enforcement actions to ensure companies pay their contributions on time. The government, as the largest employer, is also ensuring timely payments,” he said.
Historical Perspective and Resilience
Providing a historical perspective, SSNIT’s Chief Actuary, Joseph Poku, recounted previous instances where the ILO’s projections did not materialize. He referenced a 2011 report predicting a funding shortfall by 2019, which was successfully averted.
“The report (2011) predicted that without increased contribution rates, the funds would be insufficient by 2019. Yet, we have never defaulted on payments or benefits from 2019 to date,” Mr. Poku remarked.
This track record of resilience underscores SSNIT’s capacity to navigate predicted challenges through adaptive measures. Mr. Poku further emphasized the importance of these actuarial studies, conducted every three years by law, in providing a comprehensive overview of the scheme’s status, assets, and liabilities.
Mr. Poku highlighted that these projections are critical tools for identifying potential risks and implementing strategic interventions to mitigate them.
The assurances from Mr. Mbroh and the historical resilience highlighted by Mr. Poku reinforce confidence in the long-term stability of SSNIT. Despite the ILO report’s concerning projections, the proactive measures being implemented, including investment policy reviews, administrative expense rationalization, and enhanced enforcement actions, aim to secure the financial health of the scheme.
With continuous government support and strategic interventions, SSNIT is well-positioned to address potential challenges and maintain its commitment to providing reliable social security benefits to its beneficiaries.
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